August 5, 2008
Economic Snapshot - August 6, 2008
Sustained investment should underpin New Brunswick’s growth in 2008-2009
As the New Brunswick economy heads into the second half of this year, it appears to be shifting to a lower gear.
This observation is supported by the fact that since November 2007, employment growth in the province has slowed from 4.6% year over year to -0.7% year over year in June. According to Statistics Canada, the rate of job creation has fallen in both goods- and service-producing industries.
Strong growth of energy exports has led to a rise in manufacturing sales over the past nine months. Despite this increase, manufacturing employment has dropped by 2,800 jobs over the past 12 months.
According to the most recent Atlantic Report published by the Atlantic Provinces Economic Council, this cutback is primarily the result of forest-product mill closures in Dalhousie and Miramachi. Employment in education services has also fallen steadily to 24,900 jobs, its lowest level since August 2004.
This weakness in job creation appears to have contributed to a softening in demand for existing houses. Year-to-date sales of existing homes are down by 8.2% and listings are up by 4.2%. However, new construction remains quite strong. Housing starts in the first six months of the year are up 26.5%, the fastest year-to-date increase in the country.
Looking forward, while the most recent Canadian Federation of Independent Business survey suggests that business conditions in New Brunswick will be somewhat weaker over the next 12 months, this weakness should be partly offset by a number of major non-residential construction projects.
In particular, the Potash Corporation of Saskatchewan recently announced plans to expand production at its Piccadilly Mine near Sussex. According to the company, this project will cost $1.7 billion and add 600 jobs over four years. Meanwhile, the refurbishment of the Point Lepreau Nuclear Plant will cost $1 billion and involve 1,500 workers.
In view of the underlying strength of non-residential investment, both public and private, New Brunswick’s economy will probably grow slightly faster than the country as a whole in 2008, but marginally slower in 2009.
John Clinkard has over 30 years experience as an Economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Total Gross Domestic Product Growth – New Brunswick vs Canada
Source of actuals: Statistics Canada.
Forecasts and chart: Reed Construction Data – CanaData.
